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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 670.21

-1.1%

Nov 6 4:00 PM EST

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To: Michael Watkins who wrote (40847)	2/20/2000 7:44:00 PM
From: pater tenebrarum	Read Replies (2) of 99985

Michael, you are of course right - a great many of the 'new era' businesses will fail. i do believe that the raging bull market in these stocks has led to overcrowding in many sectors, and that a great deal of business that is actually generated depends on the continued flow of IPO money. that goes for the 'pure play' cos as well as for the 'picks and shovels' outfits. in many ways the economy has become dependent on the bull market - the tail is wagging the dog. but i actually agree with Greenspan's comment on investors allocating money in a sort of lottery system...buy 10 or 20 different ones, and hope that one or two become huge successes, in which case it doesn't matter what happens to the rest. however, even though this approach is quite rational, i doubt it will generate much of a return in a bear market. currently the massive credit creation and the resulting asset bubble lead to massive resource misallocations. that goes for money as well as labor. begins with the sports stadiums building boom and ends with everybody wanting to make a living trading stocks all of a sudden. i recently read about an interesting statistic: one third of YHOO's pageviews (one of the new era equivalents for money are 'eyeballs') concern its stock market section. that shows in a way how central the stock market has become to American culture as well as the economy. Prechter, in spite of having tried to catch the elusive top in vain for years, now and then comes up with a noteworthy saying. he recently remarked: "science and technology get a lot less respect in a bear market".

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